Thomspon & Binger, Inc. v. Commissioner

*1095OPINION.

The first requirement of a personal service corporation is that its income shall be ascribed primarily to the activities of the principal owners or stockholders. The taxpayer claims that its income is to be thus ascribed; that the services it rendered in these construction contracts were those of architects and engineers. From an examination of the contracts it is evident that they contemplated, not the engineering services of the taxpayer, but the erection of a completed building, and that in these contracts the taxpayer acted in the capacity of an independent contractor. Under the contracts the taxpayer was required to furnish labor and materials and to complete the building within a designated period, and the taxpayer was to receive no compensation unless and until the buildings were completed. The engineering services rendered by the principal stockholders were only one of the factors in the performance of its contracts and the income can not be ascribed primarily to such services.